Effects of COVID-19 on channel partners
New research on solution and service providers reveals how the coronavirus pandemic is affecting business plans and technology priorities for the coming months.
As the COVID-19 pandemic continues to spread, so too do the uncertainty and economic upheaval that accompany it. Spiraling infections and sobering mortality rates have forced radical changes in the way we live, work and conduct business. No segment is immune.
In the IT channel, solution and service providers find themselves struggling to deal with the pandemic's disruptions to sales cycles, support processes, vendor relationships and cash flow even as they field a flood of customer requests for technology products and services that support remote workforces. How the crisis will ultimately shake out for partners remains an open question.
The impact will be profound, and not all businesses in the IT channel, as elsewhere, will survive. Economists now say the U.S. economy will contract 30% in Q2; a late rally in Q4 will be insufficient to keep the nation from double-digit losses for the year.
The 2112 Group report, "COVID-19 Pandemic Impact on Channel Partners," provides visibility into the challenges, preparedness and recovery strategies at work among businesses determined to survive the COVID-19 crisis intact and serves as a starting point for future business continuity planning.
Based on survey results collected in late March, the report captures views of managed service providers, value-added resellers, systems integrators and IT consultants representing organizations from small to large. Some highlights of the report include:
- The biggest disruptors for partners so far include supply chain disruptions, managing a remote workforce and safely servicing customers on site.
- The biggest challenges for the remainder of 2020 include dealing with general uncertainty, maintaining income and managing expenses.
- Solution providers feel they are best prepared for crisis in the areas of providing technical support, meeting service level agreements and managing remote teams.
- To protect their businesses, solution providers are most often taking action by asking vendors for extended payment terms, applying for bank lines of credit and applying for government disaster loans.
- More than half of the respondents expect their client rosters to grow in 2020 due to increased demand for equipment, services and bandwidth needed to support remote workers.
- When asked about the most critical technologies for the rest of 2020, the clear favorite was security, followed by cloud infrastructure and services, as well as communications and collaboration.
- Partners expect their post-pandemic recovery strategies to include new marketing strategies, additional professional services capabilities and a return to live events.
How channel partners should respond
For many IT channel partners, the COVID-19 pandemic will fundamentally change assumptions about support styles, business models, sales strategies, business planning and vendor relationships. Vendors are already mulling how the crisis will alter end-user operations, technology needs and product adoption.
IT solution and service providers should do the same. Partners should anticipate radical, lasting changes as a result of this global crisis, the fallout of which will almost surely include significant shifts to -- and wholesale reimagining of -- partners' role in the indirect-sales ecosystem.
Precisely what those changes will entail remains an open question. Like the vendors and customers on either side of them, partners are feeling their way through uncharted territory. They're figuring out how technology can help ease disruption and bring order to chaos.
Those that make it to the end of 2020 may be leaner; they may also be better equipped to deliver focused technology solutions that balance business outcomes with realistic risk assessments. Many will have earned the mantle of "trusted advisor" for the customers they serve in ways they might scarcely have imagined in the past.
Many of our pre-pandemic assumptions about channel structures and performance are no longer valid. The industry is long overdue for change, and the COVID-19 crisis will shock all players -- vendors, distributors, partners, customers -- into much-needed action.
For now, we see partners doing their best to hold the line, serving customers as best they can, taking advantage of every opportunity to keep their businesses stable and viable, and looking ahead to anticipate the "new normal" that will undoubtedly follow when this pandemic is just a terrible memory.
To obtain a free copy of the full report, visit The 2112 Group's website.
